Foreword

The modern system of the market economy-capitalism-radi cally differs from the status system of the ancien regime. On the market the consumers, i.e., all of the people, are supreme. They determine by their buying or abstention from buying what should be produced, in what quantity, and of what quality ..By the instru mentality of profit and loss, the entrepreneurs and the capitalists are forced to cater to the wishes of the consumers. There is only one method for the acquisition and preservation of wealth, viz., to supply the consumers in the best possible and cheapest way with those commodities and services which they ask for most urgently. Thus, the more gifted members of society are induced to serve the concerns of everybody, including the hosts of less efficient and less gifted people. In the status society private property served the owners exclusively. In the capitalistic society private owner ship of the means of production virtually serves all those who v VI Foreword consume the goods produced. On the market a daily repeated plebiscite of the consumers determines who should own and run the plants and the farms. Thus, private ownership of producers' goods turns into a public mandate, as it were, which is withdrawn as soon as the owners-the mandatories-no longer employ it for the best possible satisfaction of the wants of the public.

The chief characteristic of the capitalistic system is precisely that it leaves for the most eminent individuals only one avenue open to deriving greatest advantage from their intellectual and moral superiority, viz., to minister to the best of their abilities to the well-being of the masses of less endowed fellow men. The captains of industry vie with one another in endeavors to supply the much talked-about common man with ever better and cheaper goods. An enterprise can .grow into bigness only by serving the many. Capitalism is essentially mass production for the satisfaction of the wants of the masses. In the political sphere the corollary of the market economy is government by the people. Representative government assigns to the citizen the same role in the conduct of public affairs that capitalism assigns to him in the conduct of production affairs. The market economy and popular government are inseparably linked with one another. They are the products of the same in tellectual and moral evolution, and they mutually condition each other. Capitalism can thrive only where there is political freedom, and political freedom can be preserved only where there is capi talism. Attempts to abolish capitalism work toward the abolition of democratic institutions, and vice versa.

II. Capitalism and its political counterpart brought to the masses civil liberties and unprecedented well-being. It gave to practically everybody the opportunity to acquire knowledge and to cultiva.te his talents. But it could not remove the intellectual inertness and lethargy of the crowds of commonplace people. In offices and factories they are committed to routine jobs without any compre hension of what makes the wheels turn and what magic rewards the unvarying performance of some simple manipulations with products of the most refined accomplishments of scientific techForeword vii nology. Their ignorance, coupled with their resentment against all those who eclipse them in any regard, makes them an easy prey to the inflammatory propaganda of the prophets of an earthly paradise to be achieved by the establishment of the total state. It is paradoxical indeed that the economic order that forces the lllOSt elllinent individuals to serve the welfare of the lllasses of ordinary people is decried as a system in which the common man is "exploited" and "sinks deeper and deeper." While the average manual worker enjoys in the capitalistic countries ameni ties of which the well-to-do of ages gone by did not even dream, the most successful and most popular ideology of our age, Marx ism, is based upon the doctrine that the laboring masses are being impoverished more and more. The masses who in their capacity as customers are "always right" and in their capacity as voters determine all political issues passionately advocate a system in which they are bound to be content with what the dictator deigns to give them and every kind of opposition is a capital offense.

III. Economic theory has exploded all that the harbingers of socialism have said to discredit the market economy and has clearly demonstrated why a socialist system, being unable to establish any kind of economic calculation, could not function. Yet the popu larity of the anticapitalistic battle cries and of the prosocialist slogans has not subsided. Recent socialist propaganda does not know of any other method of answering the devastating critique which their plans met on the part of economics than recourse to the inane subterfuge that they are "merely theoretical." Experience, they pretend, evinces the excellence of the socialist method. To .meet these objections, let us look upon the teachings of experience. It is an uncontested fact that the standard of living of the average common man is incomparably higher in the capital istic sector of the world than in the socialist or communist sector.

All socialists implicitly acknowledge this fact in their endeavors to "explain" it. They refer to various facts which, as they declare, are the reason why the socialist scheme has not brought to Russia and to the satellite countries those benefits which, according to viii Foreword the socialist doctrine, they were expected to bring. As the un satisfactory state of Russian affairs is to be ascribed to these merely accidental facts, it is fully justified to presume that the Soviet experiment has proved the soundness of the socialist doctrine. This way of arguing is in itself entirely based upon "theory" and actually amounts to a radical rejection of experimentalism. The experimental method says: As a has been tried and resulted in b, we infer that a produces b. But it must never say: Although a has been tried and resulted in c, we still infer that a produces b because we think that the outcome c was caused by the inter ference of some factors that prevented the emergence of b.

The advocates of this allegedly empirical way of reasoning fail to realize that any experience in the field of social events is ex perience of complex phenomena, i.e., of the joint effects of a multiplicity of chains of causation. It is specifically historical experience as distinct from the experience of laboratory experi ments, in which we are in a position to observe the effects of the change in one factor only, while all other factors that could possibly influence the outcome remain unaltered. Historical ex perience can therefore neither verify nor falsify any theorem in the sense in which verification or falsification of a hypothesis can be attained in the experimental procedures of the natural sci ences. In order .to learn something from history, we need a theo retical background. We can understand the records of the past only if we approach them equipped with a body of doctrinal knowledge acquired from other sources than the study of history.

No discerning advocate of socialism must question the correct ness of these statements. For the socialist scheme itself is not derived from historical experience. What history shows us is the unprecedented improvement of the average standard of living under an economic system based upon private ownership of the means of production and private initiative and entrepreneurship. Against this stark reality the socialist doctrinaires have posited the scheme of an authoritarian society in which all economic affairs are managed, by a supreme power that deprives all indi viduals of their autonomy and self-determination and whose own master plan precludes any planning on the part of other people.

Foreword ix The design of this utopia is certainly an a priori construction. Its proponents must not wax indignant if its critics too resort to a priori reasoning. Incidentally, t4ere is need to stress the fact that the Marxian 1 doctrine as interpreted by its most distinguished adepts asserts that the alleged benehcial results of socialist m.anagement that are supposed to transform the earth into a land of Cockaigne will be reaped only when the whole world is under the rule of socialism. Socialism in one or in a few countries only is in their eyes not yet genuine socialism. This dogma aims at securing the socialist concept against any adverse criticism based upon the unsatisfactory effects of the various socialist "experiments." To all those who refer to the failure of these experiments, the social ists and communists answer: Wait until the whole of mankind is under the sway of socialism; nothing that happens before this glorious goal has been achieved can disprove our assertion that socialism is the best of all conceivable modes of social organiza tion and will establish an earthly paradise.

IV. It is most important to keep in mind these epistemological facts in order to appreciate duly Professor Baudin's book, L'empire socialiste des Inka, *' which is now-very late indeed-for the first time made available in an English-language translation. It is not the author's aim to prove or to disprove any thesis. He is fully committed to the famous principle of Ranke, to relate things as they really were. M. Louis Baudin, Professor of the Faculte de Droit of Paris and member of the Academie des Sciences morales et politiques, is the most eminent representative of contemporary French eco nomic science. In his writings he has done a brilliant job in analyzing the fundamental problems of the market economy and in exploding the basic errors of many widely held doctrines. His book, Le mecanisme des prix., is certainly one of the best descrip tions of the market process. In another book-L'aube d'un nouveau liberalisme-he developed all those ideas that animate ... First published in 1928 as Volume V of "Travaux et memoires de l'Institut d'Ethnologie, Universite de Paris."

x Foreword the attempts to preserve the individual's freedom and initiative and to stem the flood of totalitarianism. Professor Baudin is not merely a great scholar and teacher. He is one of the foremost intellectual leaders of our age. Professor Baudin's analysis of the-unfortunately only meagerly available-knowledge about the social affairs and conditions of the Inca regime in Peru is a classic of history as well as of eth nology, economics, sociology, and social psychology. The author does not approach the subject of his studies with any preconceived idea. He proceeds, as the great historians have ever tried to pro ceed, sine ira et studio. It is a strange world with which his studies acquaint us. Let us quote his own resume: One sees how difficult it is to characterize social conditions in the empire of the Incas. Exceedingly backward in some respects, very far advanced in others, the Peruvians elude every classification. Their technology was at once primitive and highly perfected; they treated men like cattle, but they knew how to reward merit; they made drums from the skins of those who had revolted against them, but they loaded the leaders of their conquered enemies with gifts and allowed them to retain their status; they were ignorant of the wheel, but they pre sented plays; they did not know how to write, but they kept faultless statistics. How can it be said that the human spirit everywhere follows the same course of development and must inevitably evolve in the same way? The empire of the Incas cannot be compared with any of the great civilizations of the ancient world.

v. There is no doubt that this book, A Socialist Empire: The Incas of Peru) is of the highest importance for the historian, for the ethnologist, and for the economist. But in establishing this fact one has not yet fully appreciated the value of this unique masterwork. The innumerable books dealing with the main issue of our age, the conflict between individualism and collectivism, provide us with a description and analysis of the economic, political, legal, and constitutional problems involved. The best of them have given us all that is needed to form a well-founded opinion about the feasibility or unfeasibility of socialism as a system of social Foreword xi cooperation and human civilization. They have treated their sub ject exhaustively from the scientific point of view and in this sense one may say that they have well performed their task. But Professor Baudin's work brings to the thoughtful reader something that these praxeological and historical volumes did not and could not take up. FrOlll the pages of his treatise there emerge the shadowy outlines of life under a collectivist regime, the spectre of a human animal deprived of his essentially human quality, the power to choose and to act. These wards of the Inca were only in a zoological sense human beings. Actually they were kept like cattle in a pen. Like cattle they had nothing to worry about because their personal fate did not depend on their own behavior, but was determined by the apparatus of the system. They could in this sense be called happy. But theirs was a peculiar brand of happiness. Une menagerie d'hommes heureux-a menagerie of happy people-is the heading of the chapter in which Professor Baudin analyzes the conditions of this bizarre world of uniformity and rigidity.* This brilliant examination of the human angle of the Inca system is the main merit of this magnificent book. Marx and his followers rave about the freedom that socialism is supposed to bring to mankind, and the communists tell us again and again that "true" freedom is to be found only in the Soviet· system.

Professor Baudin shows in what this freedom really consists. It is the freedom that the shepherd grants to his flock. New York) April) 1960 LUDWIG VON MISES :II: See 'also Professor Baudin's book, La vie quotidienne au temps des derniers Incas (Paris: Hachette, 1955).